iProtean—Strategic Planning

Hospital executives are in high gear preparing their organizations for the implementation of the structural components of the Affordable Care Act (ACA)—accountable care organizations, bundled payments, medical homes and more.  For example, some hospitals are preparing applications for the Center for Medicare and Medicaid Innovation’s Bundled Payment for Care Improvement, and those applications are due in June.


But these executives face a greater degree of uncertainty today than just a few months ago—will ACA stand or will it be overturned?  The Supreme Court will present its ruling on the constitutionality of all or parts of the ACA, also in June.


So the question is, “now what?”  The consensus is that whatever the Supreme Court decides, the structural components of health reform will remain a compelling argument for the industry.  If ACA is overturned, hospitals should and will focus their efforts on private sector initiatives. (Francois de Brantes, “An Update on Bundled Payments: Overview of Public and Private Sector Initiatives,” HFMA Virtual Healthcare Finance Conference, April 2012.)


In the iProtean course Strategic Planning, Marian Jennings (M. Jennings Consulting) and Jeffrey Bauer, Ph.D. discuss how to plan during periods of uncertainty, the role of the board in that process, short- and long-term strategic planning,  financial analysis, the importance of setting priorities, plan integration and implementing the plan.


Marian Jennings, M. Jennings Consulting

Will reform stay; will it be overturned? . . . There is so much uncertainty, and no one knows for sure what will happen.


At this point, it is important that both our strategic planning and our financial planning take into account not only risk . . . but also uncertainty and how we deal with uncertainty so it doesn’t paralyze us but allows us to move forward prudently, recognizing that the future is unclear.


So how do we incorporate all these uncertainties into the strategic planning process?  It is important to start by articulating a set of assumptions for what we believe will likely happen in our market.  There has been a lot of work done on uncertainty and planning by people at the Harvard Business School and other organizations.  They have developed a framework that articulates categories of uncertainties.  One of those categories is what we call “residual uncertainties.”  Those are uncertainties that cannot be researched away.


On the national level a residual uncertainty is if and how healthcare reform will play out and what will happen with payments, what will happen with physicians.  We don’t know.


One of the ways to deal with residual uncertainties is to agree as a board on some of the indicators that would be signs of the way things are likely to go—early indicators or trigger points.  You would say, “Let’s keep our eye on this  event and if we see it happen, it tells us as a board that it’s a sign that the trend is moving in one direction versus another.” Or, what would be a precipitating event in your environment that would mean you have to go back and examine your whole strategic direction?  Would it be that on the federal level, Medicare fundamentally changes the payment system—or now, doesn’t change the payment system as specified in the ACA—or announces an across-the-board 25 percent cut?  I think almost everybody would have to go back and say, “We have to reexamine our strategic direction.”


Uncertainty is a given in our environment; we can’t wish it away.  We can’t wait for things to become clearer.  For example, we shouldn’t hope that maybe in several months we’ll see how things are heading and then we’ll know what to do.  We have to act.


A good plan is based upon a set of assumptions about how we anticipate our environment unfolding in our local market and at the state and federal level. So please spend the time to be clear about your assumptions about the future.  Recognizing uncertainty but incorporating it into our planning assumptions and into our strategic direction is a prudent way to move forward.


Jeffrey Bauer, Ph.D.

It is critically important that strategic planning be an ongoing process.  The realm of possibilities is constantly expanding, the environments in which you work are constantly changing.  Have objectives, have them written down and keep fine-tuning it.  The idea of a fixed plan is absolutely out the window.  The only way you’re going to survive in the 21st century is to have a perpetual strategic planning process.


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.